Electoral Bonds

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Context: The 26th tranche of electoral bond sales has been authorised by the Union government, and it will take place over 10 days beginning April 3 and ending April 12 at all authorised State Bank of India branches.

Details

The decision was made ahead of the Karnataka Assembly elections; the sale of such bonds is scheduled to take place over a ten-day window as part of the scheme's declared objective to "cleanse the country's political funding system," which was announced in January 2018.

Electrol Bond release

The bonds are made accessible for 30 days during the Lok Sabha election year, in addition to 10 days each in January, April, July, and October on dates set by the central government.
The electoral bonds may be purchased individually or in groups, and payments may be made to registered political parties having at least a 1% vote share in either the Lok Sabha or Vidhan Sabha elections.

Recent Changes

The scheme was modified in November 2022 to provide the Center with the authority to announce an additional fortnight of electoral bond sales in years when States and Union Territories with a legislature hold elections. Before the Assembly elections in Gujarat and Himachal Pradesh, that window was utilised to issue electoral bonds.

Keywords

Bond

Bonds are fixed-income investments that reflect loans from investors to borrowers (typically corporate or governmental).
Companies, municipalities, states, and sovereign governments utilise bonds to finance operations and initiatives.
Interest rates and bond prices are negatively associated; when rates rise, bond prices down and vice versa.
Bonds have maturity dates, after which the whole principal must be repaid to avoid default.

Must Read Articles:

Electrol Bonds: https://www.iasgyan.in/daily-current-affairs/electoral-bonds-21-2

Registered Unrecognised Political Parties: https://www.iasgyan.in/daily-current-affairs/registered-unrecognised-political-parties

National Party Tag: https://www.iasgyan.in/daily-current-affairs/national-party-tag

PRACTICE QUESTION

Q. Consider the following Statement about the Electoral bonds;

1. Electoral Bond is a bearer instrument like a Promissory Note.

2. The Electoral Bond carries the name of the payee.

3. Electoral Bonds have a validity of 30 days.

Which of the following Statement is/are incorrect?

(A) 1 and 2 only

(B) 2 and 3 only

(D) 1, 2 and 3

Answer: B

Explanation:

Statement 1 is correct: The Electoral Bond is a bearer instrument like a Promissory Note and an interest-free banking instrument. A bearer instrument is a document that authorizes the holder with the right of ownership or title of the property, such as Currency, shares or bonds.

Statement 2 is incorrect: The Electoral Bond does not carry the name of the payee. It protects the identity of political donors and parties receiving contributions. The bonds do not have the name of the donor or the receiving political party.

Statement 3 is incorrect: Electoral bonds would be issued/purchased for any value, in multiples of Rs 1,000 from the specified branches of the State Bank of India (SBI). Electoral Bonds have a validity of 15 days.

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